A single year at a public, in-state university costs an average of $9,650. Opt for a private school and you’re looking at a bill of over $33,000. With the cost of college skyrocketing, it’s likely you’ll need to use student loans to pay for your education.
Depending on your financial situation, you might not qualify for enough federal student loans to cover the full cost of attendance. In that case, you’ll need another way to fill the gap, such as obtaining private student loans.
However, getting approved for student loans without cosigner assistance can be difficult. If you are trying to get aid on your own, here’s what you should know before applying for a loan.
What is a cosigner?
A cosigner is someone — often a parent, relative, or close friend — who has a stable income and good credit. The cosigner acts a guarantor for the loan. If you fall behind on your payments, your cosigner is responsible for making them instead. When it comes to private student loans, a cosigner is important.
Most federal student loans don’t require a credit check or minimum income. By contrast, private student loans work differently.
Private lenders look at your finances, including your credit score and income, when reviewing your application. As a student, you likely don’t have much income and might not have established a solid credit history. It makes you look like a risky candidate to a private lender. That’s where a cosigner would come in.
Private lenders often will work with you if there’s a cosigner on your loan.
2 ways applying for student loans without cosigner assistance can hurt you
Here are a couple of ways applying for a loan on your own could cost you.
1. You’re less likely to receive a loan
According to a report from MeasureOne, over 92% of undergraduate private student loans had a cosigner in the 2017-2018 academic year to date. Only a small fraction of applications without cosigners are approved for a loan.
Applying for a student loan with a cosigner lessens the risk to the lender. With someone guaranteeing the loan with you, the lender is more confident that the loan will be repaid on time and is more likely to issue you a loan. If you try to apply for a student loan without a cosigner, you might find it difficult, or even impossible, to get a loan.
2. You’ll pay more in interest
Having a cosigner does more than just increase your chances of getting approved for a loan; it can also help reduce your interest rate. Because a cosigner typically has better credit and a higher income, applications with a cosigner can often land a lower rate than if you went on your own.
Even if your application is approved, you could end up paying more in interest over the length of your loan if you don’t have a cosigner. The difference in the interest rate could cost you thousands of dollars over time.
For example, if you were approved on your own for a $25,000 loan at 7.00% interest, you would pay back $9,833 in interest fees over 10 years of repayment. However, if you had a cosigner and qualified for a rate of 6.00%, you’d pay $8,306 in interest. By adding a cosigner to your application, you’d save over $1,500.
Student loan with a cosigner
Student loan without a cosigner
Total amount repaid
How to pay for school without a cosigner
Not everyone has a friend or relative who is willing to be a cosigner. Serving as a cosigner is a huge commitment that can have serious consequences, so it’s understandable if someone doesn’t want to cosign a loan with you.
However, not having a cosigner doesn’t mean you have to give up on your education. There are other ways to finance your education:
- Explore federal aid: If you’ve exhausted your federal student loan options, contact your school’s financial aid office to inquire about other types of aid. You might be able to qualify for a work-study program to help offset your college costs.
- Look for state-offered grants: Many states provide grants to students living and attending school in the area.
- Apply for scholarships: There literally are thousands of scholarships available. You can apply for and receive many at once, reducing the amount you need to borrow.
- Go to school half time: If you need to earn more money to pay for school, you can go to college half time and work at a part-time job.
- Pick up a side hustle: If you have spare time, you can launch a side hustle to earn extra money. A side gig can help cut down on how much you need to borrow.
Financing your education
Applying for student loans without cosigner help can be a costly mistake, but asking someone to be a cosigner shouldn’t be something you do without thinking it through. If you plan on enlisting a friend or relative to act as a cosigner, make sure you ask yourself these five questions.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|3.97% – 12.97%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.12% – 10.98%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|4.92% – 10.01%7||Undergraduate and Graduate|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|